It’s fantastic to be back here at TRENZ.
Rt Hon John Key
Minister of Tourism
13 May 2016
Speech to TRENZ
It’s fantastic to be back here at TRENZ.
I’d like to thank the Tourism Industry Association for having me here today.
I appreciate the great working relationship I have with Grant, Chris and the team and acknowledge all the hard work that goes into running an event like this.
It’s also great to be back in Rotorua – one of New Zealand’s best-known and best-loved tourism destinations.
Rotorua was one of the first real tourist destinations in New Zealand, and is still a must see for over a third of our international visitors.
And the region is still coming up with new ways of attracting tourists.
Just recently, my colleague and Associate Minister of Tourism, Paula Bennett, visited Crankworx - the world’s biggest mountain biking festival.
Last year Crankworx added around $3.7 million to Rotorua’s economy, and attracted over 8,000 visitors.
And, I understand this year’s event was even more successful.
Crankworx is an example of how businesses and local government can work together to deliver great outcomes for the region.
And I’m very proud that the Government played a role, through our Tourism Growth Partnership and Major Events Funds.
State of the Sector
Today I want to talk to you about the ongoing success of our tourism industry.
Visitor arrivals were up 10 per cent, to 3.3 million, in the year to March - which continues a record-breaking run.
Expenditure is also tracking well - up 31 per cent for the year to December 2015
The average spend per visitor is also up 19 per cent, which shows we’re attracting high-value, high-spending visitors which we’ve been targeting over the past few years.
We are also lucky in that we are experiencing growth in all our major markets.
China is still leading the way with 34 percent more arrivals in the year to March 2016.
Germany and the US are growing strongly and we are seeing good results in other markets such as Japan and Korea.
And for Rotorua, and many other regions around New Zealand, these visitors are supporting local businesses and helping create new jobs.
It’s amazing how far we have come since we released the Tourism 2025 framework in October 2013.
Since then, international arrivals have increased 21 per cent, international visitor spend has grown 47 per cent, and five per cent more people are directly employed in the tourism industry.
And that growth is set to continue.
To give you some perspective, it took us 13 years to get from 2 to 3 million visitors but if our current growth rate continues, it’s likely we’ll get to 4 million international visitors within next four years.
As an industry, you should feel enormously proud of your achievements.
Chris talked earlier this week about how well you are tracking against your ambitious Tourism 2025 targets.
He talked about taking stock of what you as an industry have achieved two years on, and setting some new priorities to focus on.
I am very supportive of that approach.
The Tourism 2025 framework continues to provide the industry with a coherent and coordinated way of thinking about the issues you face.
But the time is certainly right for you to take a fresh look at what you want to achieve over the coming years.
Together, we need to acknowledge that our success in achieving such rapid growth in visitor numbers does throw up some new challenges for us to address.
Looking forward, it’s important to have a clear view about what success looks like.
For me, success means attracting high-value, high spending visitors who come throughout the year, have a great time, come back again, and tell their friends and family to come here.
It means the tourism sector having what they need – whether that’s investment, people or infrastructure – to deliver the great visitor experience New Zealand is well known for.
It means making sure we are using our resources productively but carefully, to ensure we protect our beautiful scenery and landscapes.
It means all regions benefitting from tourism, through more jobs and economic opportunities.
And finally, it means the tourism sector retaining the support of New Zealanders, who see the social and economic opportunities it brings to their communities.
This is critical because the success of the tourism sector depends hugely on the goodwill of all New Zealanders.
Addressing the challenges
To realise that vision, I think there are three big challenges that Government needs to work with the sector to address.
Attracting the right visitor mix
Firstly, we need to make sure we are attracting the right mix of visitors to give us the biggest return on our marketing investment.
To do that, we need to get the balance right between investing in established markets, newer high-growth markets, and emerging markets.
In addition, we have to keep thinking about how we better manage our visitor flows to help smooth out seasonal peaks and troughs.
And Tourism New Zealand has already shifted its focus to marketing the shoulder seasons to help with that.
Responding to visitor demand
Secondly, we need to continue to provide the quality experiences that our high-value visitors expect.
This includes making sure we have world-class products and services, good infrastructure, and skilled and committed people working in the sector.
It also involves managing the challenges that higher visitor numbers place on communities, services and infrastructure.
We’ve all seen the media reports on issues like driver safety, freedom camping, overcrowding of popular visitor attractions, accommodation shortages, and price rises.
But it is important we remember that these visitors bring enormous economic benefits to the regions they visit.
All these visitors – including freedom campers - are spending money in the regions, supporting local businesses and helping create local jobs.
In total, international visitors contribute over $900 million in GST a year.
That sometimes gets overlooked in favour of focusing on the negative impacts of increasing numbers, or the bad behaviour of a very few.
Ensuring all regions realise their tourism potential
The third challenge facing the industry is therefore how to make sure that regions throughout New Zealand are benefiting from increased visitor numbers.
We want all regions to realise their tourism potential and reap the benefits it brings to local businesses and communities.
Government support for the sector
The Government is continuing to work with the tourism industry to achieve further success.
We are investing $115 million a year to help promote New Zealand in new and established markets.
We’ve invested nearly $60 million in the development and maintenance of the New Zealand Cycle Trail.
We’ve invested over $14 million in the Tourism Growth Partnership to help boost innovation and productivity in the tourism sector.
We’ve recently invested half a million dollars to provide tourism operators throughout New Zealand with practical information about the needs and preferences of Chinese visitors, especially the increasing numbers travelling independently.
And we have made significant improvements to our visitor visa application process enabling most travellers to apply for their visas online and, for Chinese nationals in their own language.
The Government supports the sector in many other ways – such as investing in our conservation estate – the jewel in New Zealand’s tourism crown.
In 2015 alone, the Government spent over $100 million on the Department of Conservation’s network of huts, tracks and campgrounds.
We also help fund major events which help attract high-value visitors.
Since 2013, the Government has invested $46 million in 58 events - including the FIFA under 20 World Cup, the Cricket World Cup and the World of Wearable Arts.
We also support the sector by ensuring our immigration and border services are user-friendly.
In the last Budget, we committed $33 million to boost the number of immigration officers in response to record-breaking visitor numbers.
The new Immigration ONLINE system is transforming the way visas are delivered – and Immigration New Zealand is on track to meeting their target of 80 per cent of applications being made online by 2018.
We are also supporting the sector by negotiating new air service agreements, which allow international airlines to fly here.
Since 2012, we have negotiated or updated 50 air service agreements to help strengthen our connections with current or potential visitor markets.
And finally, we are supporting the sector through our investment in infrastructure like roading and broadband, which is essential in ensuring a high-quality visitor experience.
Looking forward, the Government will continue to support the tourism sector as we recognise the economic benefits it brings to our economy.
I am pleased to announce that in Budget 2016 we are investing a further $20 million in tourism over the next four years.
That’s in addition to the more than $130 million a year we already spend.
The additional money will fund initiatives to help us attract the right visitor mix, respond to visitor demand and ensure all regions realise their tourism potential.
Budget 2016 will see an additional $8 million over four years for Tourism New Zealand to target key growth markets such as India and the United States.
With strong economic growth prospects, India’s potential as a source of visitors is high. And the highest number of visitors from India peak in May – one of our shoulder seasons.
New air services to and from the US are bringing more flights from Los Angeles, San Francisco and Houston, and open up new opportunities for us across the eastern seaboard of the US.
The Government is also committed to ensuring all regions fully realise their tourism potential.
We recognise that some of our smaller communities are finding it hard to deal with the increase in tourist numbers.
They want to provide a great tourism experience but they need extra facilities to cope.
I am therefore pleased to announce Budget 2016 will include a new $12 million fund to help communities fund some of their smaller infrastructure needs.
One of the aims of the fund will be to help local communities manage freedom camping issues.
A working group, which will include representatives from the sector, will help set up the application process and funding criteria for these grants.
We also need to ensure the sector continues to offer a world-class visitor experience.
The New Zealand Cycle Trail, has already been extremely successful in helping attract high-value visitors, getting them to stay longer and encourage flows of visitors into the regions.
In January 2015, 125,000 people used the New Zealand Cycle Trail, compared to 97,000 in January 2014.
This is great to see.
We are keen to see even more people using the trail, and I will be making an announcement about the New Zealand Cycle Trail very soon.
Tourism Growth Partnership Fund
The Government will also continue to support the Tourism Growth Partnership programme which aims to boost innovation and lift productivity in the tourism sector
I am pleased to announce today the Government will invest in three new projects
We are investing $2.5 million in Te Puia, here in Rotorua.
This funding will go towards the development of new facilities at the New Zealand Māori Arts and Crafts Institute, including a new bone, stone and carving school, and a Maori tattoo studio.
This project will provide visitors with access and insight into contemporary Māori culture.
Timber Trail Adventures Limited will receive just over $1.2 million dollars for the development of a lodge at the halfway point on the Timber Trail cycleway, one of New Zealand’s Great Rides.
The 80 bed Lodge will provide comfortable accommodation that will help to increase international visitors to the cycle trail.
Finally, Queenstown Bungy will receive half a million dollars for the development of a new bungy launch system at its Nevis site.
All these projects will, of course, be co-funded by industry.
As well as investing in the sector directly, we are helping the industry attract the money needed to fund infrastructure.
A Steering Group involving government and people from the tourism sector has been established to help accelerate investment.
The group is currently working to identify and develop a small number of opportunities to develop high-quality accommodation and to promote those opportunities to overseas investors.
As well as great experiences, products and infrastructure, the sector needs great people.
Skilled and committed people are at the centre of a great visitor experience. And with the right staff businesses can flourish and grow.
A priority for the Government is continuing to work with the sector to help ensure you have the skilled people you need to grow your businesses.
We have been working in close partnership with TIA to deliver its People and Skills strategy, which was released last year.
I commend TIA on their leadership in this space and look forward to seeing the results of these.
Ladies and gentlemen, tourism is an industry that continues to excel.
The rapid visitor growth we’ve seen is testament to the hard work and the fantastic New Zealand experience offered to those who visit our shores.
That success has raised some challenges for us, and I am committed to continuing to work with the sector to address those.
Attracting the visitors we want, making sure the sector has what it needs to deliver a great visitor experience, and enabling all regions to benefit will mean the sector is well-placed to make an even bigger contribution in the future – benefiting all New Zealanders.
Thank you once again for having me here today.